Setting Your Salary: Pay Strategies for Startup Leaders

Setting Your Salary: Pay Strategies for Startup Leaders

Many entrepreneurs in their early stages of business often don't assign themselves a salary, considering it less of a priority. However, setting an appropriate salary is crucial for maintaining both personal stability and the financial health of the company.

Timing and Amount of Salary

Determining when to assign oneself a salary and what the ideal amount would be is a common question among entrepreneurs. However, there is no one-size-fits-all answer, as it depends on the business model, company growth, and personal goals of each founder. The essential goal is to strike a balance that allows for both individual financial stability and sustainable business development.

René Lomelí, Partner at 500 Global in Latin America, highlights several factors that influence the decision to establish a salary, including the personal circumstances of the entrepreneurs. Factors such as age, family situation, and financial responsibilities can all affect the timing and amount of salary allocation.

When there are multiple founders in a startup, it's common to initially establish an equitable salary. However, as the company grows, each member may take on different roles, and salaries tend to vary. The priority is not so much salary equality but ensuring the financial stability of each founder while maintaining a balance in business development.

Perhaps you might also be interested in reading: CMI Capital participates in Millennium Leadership Program

Salaries in Industry Context

According to the "Startup Salary Study in LatAm" by 500 Global, CEOs of startups in Latin America earn an average of around $3,000 per month. This amount may vary depending on the country and the executive's experience. In Mexico, for example, the average is $4,000, while in Argentina, it's $2,000.

Comparing with previous studies, there's a significant increase in incomes, which can be attributed to various factors such as a higher number of surveys conducted and the rising cost of living in the region. This increase reflects the need to adapt salaries to economic conditions and ensure employees' financial stability.

In the early stages of a startup, salaries are often low or nonexistent due to budget constraints. As the company grows and receives investments, more appropriate salaries can be allocated, although likely below market rates. Finally, when the company is established, the board of directors takes responsibility for setting executive salaries.

Gender Equity in Salaries

While the study does not specifically address the salaries of female founders, it is noted that female entrepreneurs have the potential to promote salary equality and attract more female talent to the industry.

Establishing a salary as an entrepreneur requires a balance between individual needs and company goals. It's essential to adapt to market conditions and ensure equitable distribution of resources, always prioritizing financial sustainability.